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CMS sees modest growth in health care spending through 2014

Med prices also slow climb in 2014: hospital prices up 1.4%, physician-clinical services up .5%

Medicare sign with dollar signsJuly 30, 2015 – An annual look at the pace of health spending in the U.S. indicates the growth will be about 5.8 percent through 2024. This rate is substantially lower than the 9 percent average rate in the three decades before 2008.

The report by the Office of the Actuary at the Centers for Medicare & Medicaid Services was published this week in Health Affairs.

“Growth in overall health spending remains modest even as more Americans are covered, many for the first time. Per-capita spending and medical inflation are all at historically very modest levels,” said CMS Acting Administrator Andy Slavitt.


“We cannot be complacent. The task ahead for all of us is to keep people healthier while spending smarter across all categories of care delivery so that we can sustain these results.”

In 2014, health spending in the United States is projected to have reached $3.1 trillion, or $9,695 per person. It increased by 5.5 percent from the previous year as millions gained health insurance coverage and as new expensive specialty drugs hit the market.

Prescription drug spending alone increased 12.6 percent in 2014, the highest growth since 2002. While more people are getting coverage, annual growth in per-enrollee expenditures in 2014 for private health insurance (5.4 percent), Medicare (2.7 percent) and Medicaid (-0.8 percent) remained slow in historical terms.

Other findings from the report:

  ● Even with an increased number of people getting health coverage in 2014, medical price inflation was 1.4 percent. Hospital, and physician and clinical services, which make up the largest portions of medical prices, also increased slowly at a 1.4 and 0.5 percent, respectively.

  ● Per-capita premium growth in private health plans is projected to slow to 2.8 percent in 2015 reflecting the expectation of somewhat healthier Marketplace enrollees and the increasing prevalence of high-deductible health plans offered by employers. The authors projected that per-capita premium growth would remain below 6 percent through the end of the projection period (2024). 

  ● Approximately 19.1 million additional people are expected to enroll in Medicare over the next 11 years as more members of the Baby Boom generation reach the Medicare eligibility age.

  ● Medicaid:  In 2014, per capita Medicaid spending is projected to have decreased by 0.8 percent as the newly enrolled are expected to be somewhat healthier than those who were enrolled previously.  Overall spending, however, is projected to have increased by 12.0 percent in 2014 as a result of a 12.9-percent increase in enrollment related to the ACA coverage expansion.

  ● While the newly enrolled Medicaid adult population is projected to cost more than adults who were enrolled in the program in 2013, the authors expect that per-enrollee costs will fall below the costs of other adults after pent up demand for medical care is satisfied. 

  ● The insured rate is expected to rise from 86.0 percent to 92.4 percent as the number of uninsured persons is projected to fall by 18 million over the next 11 years.

  ● With increases in coverage, the share of health expenses that Americans pay out-of-pocket is projected to decline from 11.6 percent in 2013 to 10.0 percent in 2024.

The OACT report online.

An article about the study also being published by Health Affairs.

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